Savings and tax
Two things you can only do before 5 April 2027
In my customer-facing time at IG Group, there was always a flurry of activity around the end of the tax year. Everyone's busy, so financial admin — especially the tedious tax kind — tends to get pushed until March.
This year, two things have a hard stop and after 5 April 2027 they're gone. For most people under 65 they may not return for a long time.
What's changing
From 6 April 2027, if you're under 65, the most you can put into a cash ISA each year drops from £20,000 to £12,000. The overall ISA allowance stays at £20,000, and the remaining £8,000 can still go into a stocks and shares ISA.
Two more rules arrive with it, to stop people getting round the new limit:
- You won't be able to transfer a stocks and shares ISA into a cash ISA
- Interest on cash sitting uninvested inside a stocks and shares ISA will face a flat 22% charge, taken by your provider
Separately, tax on savings interest outside an ISA goes up by two percentage points, to 22%, 42% and 47% (depending on your tax band).
So this tax year is the last one where you can do both of the things below.
1. Put the full £20,000 into a cash ISA
If you're under 65, this is the last tax year you can put the whole £20,000 into a cash ISA. From next April it's £12,000. The £20,000 limit comes back from the start of the tax year in which you turn 65.
The £8,000 difference doesn't sound like much. But money in an ISA stays tax-free for as long as it stays in an ISA, so the difference repeats every year.
Here's what £8,000 earning 4% would cost in tax each year from April 2027 if it sat in an ordinary savings account instead. That's £320 of interest a year, assuming your Personal Savings Allowance is already used up:
| Tax band | Tax on £320 of interest | You keep |
|---|---|---|
| Basic rate (22%) | £70 | £250 |
| Higher rate (42%) | £134 | £186 |
| Additional rate (47%) | £150 | £170 |
In a cash ISA, you'd keep all £320. As a couple, you each have your own allowance, so the gap doubles.
If your savings interest sits comfortably inside your Personal Savings Allowance, this matters much less, because the interest is already tax-free. At 4%, a higher-rate taxpayer uses up the £500 allowance at around £12,500 of savings.
One more thing worth knowing: from April 2027 the rules only work in one direction. You can still move money from a cash ISA into a stocks and shares ISA whenever you like. But you won't be able to move it back until you're 65.
2. Move cash out of a stocks and shares ISA, if you want it to stay cash
This one gets less attention.
Plenty of people have cash sitting inside a stocks and shares ISA, sometimes waiting to be invested.
Right now, you can transfer it into a cash ISA without using any of this year's allowance. From 6 April 2027, you can't until you're 65.
At the same time, any interest that cash earns inside the stocks and shares ISA will face a 22% charge, deducted by your provider. Your Personal Savings Allowance can't be used against it.
£10,000 earning 4% is £400 of interest a year.
In a cash ISA, you keep the full £400. Left inside a stocks and shares ISA from April 2027, you keep £312.
If you're a basic-rate taxpayer with some of your £1,000 Personal Savings Allowance still unused, the gap is wider: the same interest in an ordinary savings account would be tax-free.
After April 2027 you could still withdraw it and pay it into a cash ISA. But that counts as a new payment in, so it uses up part of your £12,000 cash ISA allowance for that year.
A few practical things
Transfer, don't withdraw. To move ISA money between accounts, ask the provider you're moving to for an ISA transfer. If you take the money out yourself and pay it back in, it counts against your allowance.
Allow time. HMRC's guideline is up to 15 working days for a transfer between cash ISAs, and up to 30 days where a stocks and shares ISA is involved. The last week of March is not the moment to start.
Check the account accepts transfers in. Not every cash ISA does.
Two people, two allowances. If you're married or in a civil partnership, each of you has your own £20,000 this year.
None of this is a reason to change money you want invested. It's about money you've already decided should stay as cash. If that's you, the window is this tax year.
If you want to see where your interest lands against your allowance, I built a free calculator that does exactly that. No sign-up, nothing stored.